Dean Divina J Del Castillo and Other

Mercantile Law
J. Del Castillo & other

Recent Cases
1
Letter of Credit
2
Letter of Credit
Marphil Export Corporation and Ireneo Lim vs. Allied Banking Corporation
G.R. No. 187922, September 21, 2016
In order to consider a correspondent bank as a confirming bank, it must have

assumed a direct obligation to the seller as if it had issued the letter of credit
itself. If the correspondent bank was a confirming bank, then a categorical
declaration should have been stated in the letter of credit that the correspondent
bank is to honor all drafts drawn in conformity with the letter of credit.
3
2
General Banking Law
4
General Banking Law - Diligence Required of Banks
Philippine National Bank vs. Sps. Chea Chee Chong

G.R. No. 170865, April 25, 2012, J. Del Castillo
It bears stressing that the diligence required of banks is more than that of a Roman
pater familias or a good father of a family. The highest degree of diligence is
expected. PNB miserably failed to do its duty of exercising extraordinary diligence
and reasonable business prudence. PNB’s (the collecting bank) act of releasing the
proceeds of the check prior to the lapse of the clearing period, especially so where
the drawee bank is a foreign bank and the amounts involved were large, is contrary
to normal or ordinary banking practice.
5
Land Bank of the Philippines v. Oñate

G.R. No. 192371; January 15, 2014, J. Del Castillo
A bank who mismanages the trust accounts of its client cannot benefit from the
inaccuracies of the reports resulting therefrom. It cannot impute the consequence
of its negligence to the client. The bank must record every single transaction
accurately, down to the last centavo and as promptly as possible. This has to be
done if the account is to reflect at any given time the amount of money the
depositor can dispose of as he sees fit, confident that the bank will deliver it as
and to whomever he directs.
6
Philippine National Bank v. F.F. Cruz and Co., Inc.

G.R. No. 173259, July 25, 2011, J. Del Castillo
PNB was negligent with respect to its failure to detect the forgeries which could have prevented
the loss. PNB also failed to make the proper verification because the applications for the
manager’s check do not bear the signature of the bank verifier.
In Philippine Bank of Commerce v. Court of Appeals and The Consolidated Bank & Trust
Corporation v. Court of Appeals, where the bank’s negligence is the proximate cause of the loss
and the depositor is guilty of contributory negligence, the Court allocated the damages between
the bank and the depositor on a 60-40 ratio. The same ruling applies in this case considering that
PNB’s negligence is the proximate cause of the loss while the issue as to F.F. Cruz and Co., Inc.’s
contributory negligence has been settled with finality in G.R. No. 173278.
7
General Banking Law - Mortgage Redemption
WHITE MARKETING DEVELOPMENT CORPORATION vs. GRANDWOOD FURNITURE

& WOODWORK, INC.
G.R. No. 222407, SECOND DIVISION, November 23, 2016, MENDOZA, J.
The shortened period of redemption provided in Section 47 of R.A. No. 8791 serves as
additional security and protection to mortgagee-banks in order for them to maintain a
solvent and liquid financial status. The period is not extended by the mere fact that
the bank assigned its interest to the mortgage to a non-banking institution because
the assignee merely steps into the shoes of the mortgagee bank and acquires all its
rights, interests and benefits under the mortgage-including the shortened redemption
period. Moreover, to extend the redemption period would prejudice the ability of the
banks to quickly dispose of its hard assets to maintain solvency and liquidity.
8
3
Anti-Money Laundering
Law
9
Anti-Money Laundering Law
Mendoza v. Court of Appeals

G.R. No. 216914, EN BANC, December 6, 2016, PEREZ,J.
Taken into account Section 11 of the AMLA, the Court found nothing arbitrary in the
allowance and authorization to AMLC to undertake an inquiry into certain bank
accounts or deposits. Instead, the Court found that it provides safeguards before a
bank inquiry order is issued, ensuring adherence to the general state policy of
preserving the absolutely confidential nature of Philippine bank accounts:
(continued to next slide)
10
Anti-Money Laundering Law
Mendoza v. Court of Appeals

G.R. No. 216914, EN BANC, December 6, 2016, PEREZ,J.
a. The AMLC is required to establish probable cause as basis for its ex-parte application for bank inquiry
order;
b. The CA, independent of the AMLC's demonstration of probable cause, itself makes a finding of
probable cause that the deposits or investments are related to an unlawful activity under Section 3(i) or
a money laundering offense under Section 4 of the AMLA;
c. A bank inquiry court order ex-parte for related accounts is preceded by a bank inquiry court order ex-
parte for the principal account which court order ex-parte for related accounts is separately based on
probable cause that such related account is materially linked to the principal account inquired into; and
d. The authority to inquire into or examine the main or principal account and the related accounts shall
comply with the requirements of Article III, Sections 2 and 3 of the Constitution.
11
4
Intellectual Property
Code
12
Intellectual Property Code - Trademark
Societe Des Produits, Nestle, S.A. v. Puregold Price Club, Inc.

G.R. No. 217194, September 6, 2017
The word "COFFEE" is the common dominant feature between Nestle's mark "COFFEE-MATE" and Puregold's
mark "COFFEE MATCH." However, following the IPC’s prohibition of registration of generic marks, the word
"COFFEE" cannot be exclusively appropriated by either Nestle or Puregold since it is generic or descriptive of
the goods they seek to identify. The distinctive features of both marks are sufficient to warn the purchasing
public which are Nestle's products and which are Puregold's products. While both "-MATE" and "MATCH"
contain the same first three letters, the last two letters in Puregold's mark, "C" and "H," rendered a visual and
aural character that made it easily distinguishable from Nestle's mark. Also, the distinctiveness of Puregold's
mark with two separate words with capital letters "C" and "M" made it distinguishable from Nestle's mark which
is one word with a hyphenated small letter "-m" in its mark. In addition, there is a phonetic difference in
pronunciation between Nestle's "-MATE" and Puregold's "MATCH." As a result, the eyes and ears of the
consumer would not mistake Nestle's product for Puregold's product. Hence, likelihood of confusion between
Nestle's product and Puregold's product does not exist. 13
Mang Inasal Philippines, Inc. V. IFP Manufacturing Corporation

G.R. No. 221717, June 19, 2017
Applying the dominancy test, the Court held that the OK Hotdog Inasal mark is a colorable imitation of the Mang
Inasal mark.
First, it is undisputed that the OK Hotdog Inasal mark copied and adopted as one of its dominant features the
"INASAL" element of the Mang Inasal mark. Given that the "INASAL" element is, at the same time, the dominant
and most distinctive feature of the Mang Inasal mark, the said element's incorporation in the OK Hotdog Inasal
mark has the potential of projecting a deceptive and false impression that the latter mark is somehow linked or
associated with the former mark.
14
Mang Inasal Philippines, Inc. V. IFP Manufacturing Corporation

G.R. No. 221717, June 19, 2017
Second, the differences between the two marks are trumped by the overall impression
created by their similarity. The mere fact that there are other elements in the OK Hotdog
Inasal mark that are not present in the Mang Inasal mark actually does little to change the
probable public perception that both marks are linked or associated. It is doubtful that an
average buyer catching a casual glimpse of the OK Hotdog Inasal mark would pay more
attention to the peripheral details of the said mark than it would to the mark's more
prominent feature, especially when the same invokes the distinctive feature of another more
popular brand.
15
UFC Philippines, Inc. (Now Merged With Nutri-Asia, Inc., With Nutri-Asia, Inc. as
the Surviving Entity), v. Fiesta Barrio Manufacturing Corporation
G.R. No. 198889, January 20, 2016
The scope of protection afforded to registered trademark owners is not limited to

protection from infringers with identical goods. The scope of protection extends to
protection from infringers with related goods, and to market areas that are the normal
expansion of business of the registered trademark owners.
16
UFC Philippines, Inc. (Now Merged With Nutri-Asia, Inc., With Nutri-Asia, Inc. as
the Surviving Entity), v. Fiesta Barrio Manufacturing Corporation
G.R. No. 198889, January 20, 2016
In the case of the use of “Papa” in catsup v. lechon sauce, the registration of “Papa Boy” lechon
sauce was denied because the product itself is related to catsup. They are both household
products found on the same grocery aisle, with similar packaging. The public could think that
maker of Papa catsup had expanded its product mix to include lechon sauce, and that the "PAPA
BOY" lechon sauce is now part of the "PAPA" family of sauces. Thus, if allowed registration,
confusion of business may set in, and hard-earned goodwill of the maker of Papa catsup may be
associated to the newer product introduced by Papa Boy lechon sauce.
A person's father has no logical connection with catsup products, and that precisely makes
"PAPA" as an arbitrary mark capable of being registered, as it is distinctive. 17
Taiwan Kolin Corporation, LTD., v. Kolin Electronics Co. Inc.

G.R. No. 209843, March 15, 2015
Whether or not the products covered by the trademark sought to be registered by Taiwan Kolin, on
the one hand, and those covered by the prior issued certificate of registration in favor of Kolin
Electronics, on the other, fall under the same categories in the NCL is not the sole and decisive
factor in determining a possible violation of Kolin Electronics’ intellectual property right should
petitioner’s application be granted. It is hornbook doctrine that emphasis should be on the
similarity of the products involved and not on the arbitrary classification or general description of
their properties or characteristics. The mere fact that one person has adopted and used a
trademark on his goods would not prevent the adoption and use of the same trademark by others
on unrelated articles of a different kind.
18
Taiwan Kolin Corporation, LTD., v. Kolin Electronics Co. Inc.

G.R. No. 209843, March 15, 2015
In accord with common empirical experience, the useful lives of televisions and DVD players last
for about five (5) years, minimum, making replacement purchases very infrequent. The same goes
true with converters and regulators that are seldom replaced despite the acquisition of new
equipment to be plugged onto it. In addition, the amount the buyer would be parting with cannot
be deemed minimal considering that the price of televisions or DVD players can exceed today’s
monthly minimum wage. In light of these circumstances, it is then expected that the ordinary
intelligent buyer would be more discerning when it comes to deciding which electronic product
they are going to purchase, and it is this standard which the Court applied in determining the
likelihood of confusion should petition for application be granted.
19
Intellectual Property Code - Copyright
Sison Olaño, Sergio T. Ong, Marilyn O. Go, And Jap Fuk Hai, v. Lim Eng Co.
G.R. No. 195835, March 14, 2016
Section 172.1 (i) of the IPC covers "illustrations, maps, plans, sketches, charts and three-dimensional
works relative to geography, topography, architecture or science." As such, copyright protection covers
only the hatch door sketches/drawings and not the actual hatch door they depict.
A hatch door, by its nature is an object of utility. It is defined as a small door, small gate or an opening
that resembles a window equipped with an escape for use in case of fire or emergency. It is thus by
nature, functional and utilitarian serving as egress access during emergency. It is not primarily an
artistic creation but rather an object of utility designed to have aesthetic appeal. It is intrinsically a
useful article, which, as a whole, is not eligible for copyright.
20
Caterpillar, Inc. v. Manolo P. Samson

G.R. No. 205972 and G.R. No. 164352, November 9, 2016
An action for the cancellation of trademark is a remedy available to a person who believes that he is or
will be damaged by the registration of a mark. On the other hand, the criminal actions for unfair
competition involved the determination of whether or not the respondent had given his goods the
general appearance of the goods of the petitioner, with the intent to deceive the public or defraud the
petitioner as his competitor. In the suit for the cancellation of trademark, the issue of lawful registration
should necessarily be determined, but registration is not a consideration necessary in unfair
competition. Indeed, unfair competition is committed if the effect of the act is to pass off to the public
the goods of one man as the goods of another; it is independent of registration. As fittingly put in R.F. &
Alexander & Co. v. Ang, "one may be declared [an] unfair competitor even if his competing trademark is
registered."
21
ABS-CBN Corporation v. Felipe Gozon, et al.

G.R. No. 195956, March 11, 2015
News or the event itself is not copyrightable. However, an event can be captured and
presented in a specific medium. News as expressed in a video footage is entitled to
copyright protection.
22
Microsoft Corporation v. Manansala

G.R. No. 166391, 21 October 2015
The mere sale of illicit copies of software programs is enough by itself to show the
existence of probable cause for copyright infringement.
23
5
Corporation Law
24
Corporation Law – Doctrine of Piercing the Corporate Veil
Leo R. Rosales, et. al. vs. New A.N.J.H. Enterprises & N.H. Oil Mill Corporation,
et. al.
G.R. No. 203355, 18 August 2015
Subsequent events, however, revealed that the buyer of the assets of their employer was a
corporation owned by the same employer and members of his family. Furthermore, the
business re-opened in less than a month under the same management. Admittedly, mere
ownership by a single stockholder of all or nearly all of the capital stock of the corporation
does not by itself justify piercing the corporate veil. Nonetheless, in this case, other
circumstances show that the buyer of the assets of petitioners' employer is none other than
his alter ego.
25
Corporation Law – Doctrine of Piercing the Corporate Veil
Pacific Rehouse Corporation vs. Court of Appeals

GR 199687, March 24, 2014
Where the court rendered judgment against a stock brokerage firm directing the latter to
return ck which it sold without authority but the writ of execution was returned unsatisfied,
an alias writ could not be enforced against its parent company because the court has not
acquired jurisdiction over the latter and while the parent company owns and controls the
brokerage firm, there is no showing that the control was used to violate the rights of the
plaintiff.
26
Corporation Law - Doctrine of Piercing the Corporate Veil
Vicmar Development Corporation v. Elarcosa

G.R. No. 202215, December 9, 2015, J. Del Castillo
Where it appears that business enterprises are owned, conducted and controlled by the same parties,
law and equity will disregard the legal fiction that these corporations are distinct entities and shall treat
them as one. This is in order to protect the rights of third persons, as in this case, to safeguard the
rights of respondents.
Petitioners failed to refute the contention that Vicmar Development Corporation and its branches have
the same owner and management — which included one resident manager, one administrative
department, one and the same personnel and finance sections. Notably, all respondents were employed
by the same plant manager, who signed their identification cards some of whom were under Vicmar, and
the others under TFDI.
27
Dutch Movers, Inc. v. Lequin

G.R. No. 210032, April 25, 2017, J. Del Castillo
Piercing the veil of corporate fiction is allowed, and responsible persons may be
impleaded, and be held solidarily liable even after final judgment and on execution,
provided that such persons deliberately used the corporate vehicle to unjustly
evade the judgment obligation, or resorted to fraud, bad faith, or malice in evading
their obligation.
28
Harpoon Marine Services, Inc., et al. v. Fernan H. Francisco

G.R. No. 167751, 02 March 2011, J. Del Castillo
Obligations incurred by corporate officers, acting as such corporate agents, are not
theirs but the direct accountabilities of the corporation they represent. As such,
they should not be generally held jointly and solidarily liable with the corporation.
The general rule is grounded on the theory that a corporation has a legal
personality separate and distinct from the persons comprising it. To warrant the
piercing of the veil of corporate fiction, the officer’s bad faith or wrongdoing must
be established clearly and convincingly as bad faith is never presumed.
29
Corporation Law – Nationality of Corporations
Rule 1
30
Rule 2
31
Rule 3
32
NARRA NICKEL MINING AND DEVELOPMENT CORP vs. REDMONT

CONSOLIDATED MINES CORP.
G.R. No. 195580, 28 January 2015
▰ The Control Test can be, as it has been, applied jointly with the Grandfather Rule to
determine the observance of foreign ownership restriction in nationalized economic
activities.
▰ The Control Test and the Grandfather Rule are not, as it were, incompatible ownership-
determinant methods that can only be applied alternative to each other. Rather, these
methods can, if appropriate, be used cumulatively in the determination of the ownership and
control of corporations engaged in fully or partly nationalized activities, as the mining
operation involved in this case or the operation of public utilities as in Gamboa or Bayantel.
33

G.R. No. 195580, 28 January 2015
▰ The Grandfather Rule, standing alone, should not be used to determine the Filipino
ownership and control in a corporation, as it could result in an otherwise foreign
corporation rendered qualified to perform nationalized or partly nationalized activities.
Hence, it is only when the Control Test is first complied with that the Grandfather Rule
may be applied. Put in another manner, if the subject corporation’s Filipino equity falls
below the threshold 60%, the corporation is immediately considered foreign-owned, in
which case, the need to resort to the Grandfather Rule disappears.
(continued to next slide) 34


G.R. No. 195580, 28 January 2015
▰ On the other hand, a corporation that complies with the 60-40 Filipino to foreign equity
requirement can be considered a Filipino corporation if there is no doubt as to who has the
“beneficial ownership” and “control” of the corporation. In that instance, there is no need for a
dissection or further inquiry on the ownership of the corporate shareholders in both the investing
and investee corporation or the application of the Grandfather Rule. As a corollary rule, even if the
60-40 Filipino to foreign equity ratio is apparently met by the subject or investee corporation, a
resort to the Grandfather Rule is necessary if doubt exists as to the locus of the “beneficial
ownership” and “control.” In this case, a further investigation as to the nationality of the
personalities with the beneficial ownership and control of the corporate shareholders in both the
investing and investee corporations is necessary.
35
36
37
38
Jose Roy III vs. Chairperson Teresita Herbosa

G.R. No. 207246, 22 November 2016
The pronouncement of the Court in the Gamboa Resolution - the constitutional requirement
to "apply uniformly and across the board to all classes of shares, regardless of
nomenclature and category, comprising the capital of a corporation - is clearly an obiter
dictum that cannot override the Court's unequivocal definition of the term "capital" in both
the Gamboa Decision and Resolution.
39

G.R. No. 207246, 22 November 2016
Nowhere in the discussion of the definition of the term "capital" in Section 11, Article XII of
the 1987 Constitution in the Gamboa Decision did the Court mention the 60% Filipino equity
requirement to be applied to each class of shares. The definition of "Philippine national" in
the FIA and expounded in its IRR, which the Court adopted in its interpretation of the term
"capital", does not support such application. In fact, even the Final Word of the Gamboa
Resolution does not even intimate or suggest the need for a clarification or re-interpretation.
40

G.R. No. 207246, 22 November 2016
To revisit or even clarify the unequivocal definition of the term "capital" as referring "only to
shares of stock entitled to vote in the election of directors" and apply the 60% Filipino
ownership requirement to each class of share is effectively and unwarrantedly amending or
changing the Gamboa Decision and Resolution. The Gamboa Decision and Resolution
Doctrine did NOT make any definitive ruling that the 60% Filipino ownership requirement was
intended to apply to each class of share.
41
Corporation Law – Corporate Office
Wesleyan University-Philippines vs. Guillermo T. Maglaya, Sr.

G.R. No. 212774, January 23, 2017
The creation of the position is under the corporation's charter or by-laws, and that
the election of the officer is by the directors or stockholders must concur in order for an
individual to be considered a corporate officer, as against an ordinary employee or
officer. It is only when the officer claiming to have been illegally dismissed is classified
as such corporate officer that the issue is deemed an intra-corporate dispute which
falls within the jurisdiction of the trial courts.
42
Corporation Law - Liability of Corporate Officers and Directors
ICO v. Systems Technology Institute, Inc.

A corporation, as a juridical entity, may act only through its directors, officers and
employees. Obligations incurred as a result of the directors’ and officers’ acts as
corporate agents, are not their personal liability but the direct responsibility of the
corporation they represent. As a rule, they are only solidarily liable with the
corporation for the illegal termination of services of employees if they acted with
malice or bad faith.
43
Corporation Law - Liability of Corporate Officers and Directors
ICO v. Systems Technology Institute, Inc.

To hold a director or officer personally liable for corporate obligations, two

requisites must concur:
● it must be alleged in the complaint that the director or officer assented to
patently unlawful acts of the corporation or that the officer was guilty of gross
negligence or bad faith; and
● there must be proof that the officer acted in bad faith.
44
Corporation Law - Corporate Acquisitions
Y-I Leisure Philippines vs James Yu

GR No. 207161, September 8, 2015
The first exception under the Nell Doctrine, where the transferee corporation expressly or impliedly
agrees to assume the transferor's debts, is provided under Article 2047 of the Civil Code. When a person
binds himself solidarily with the principal debtor, then a contract of suretyship is produced. Necessarily,
the corporation which expressly or impliedly agrees to assume the transferor's debts shall be liable to
the same.
The second exception under the doctrine, as to the merger and consolidation of corporations, is well-
established under Sections 76 to 80, Title X of the Corporation Code. If the transfer of assets of one
corporation to another amounts to a merger or consolidation, then the transferee corporation must take
over the liabilities of the transferor.
45

Another exception of the doctrine, where the sale of all corporate assets is entered into fraudulently to
escape liability for transferor's debts, can be found under Article 1388 of the Civil Code. It provides that
whoever acquires in bad faith the things alienated in fraud of creditors, shall indemnify the latter for
damages suffered. Thus, if there is fraud in the transfer of all the assets of the transferor corporation,
its creditors can hold the transferee liable.
The legal basis of the last in the four (4) exceptions to the Nell Doctrine, where the purchasing
corporation is merely a continuation of the selling corporation, is challenging to determine.
46

In other words, in this last exception, the transferee purchases not only the assets of the
transferor, but also its business. As a result of the sale, the transferor is merely left with its
juridical existence, devoid of its industry and earning capacity. Fittingly, the proper provision
of law that is contemplated by this exception would be Section 40 of the Corporation Code.
47

The purpose of the business-enterprise transfer is to protect the creditors of the business by
allowing them a remedy against the new owner of the assets and business enterprise. Otherwise,
creditors would be left "holding the bag," because they may not be able to recover from the
transferor who has "disappeared with the loot," or against the transferee who can claim that he is
a purchaser in good faith and for value. Based on the foregoing, as the exception of the Nell
doctrine relates to the protection of the creditors of the transferor corporation, and does not
depend on any deceit committed by the transferee -corporation, then fraud is certainly not an
element of the business enterprise doctrine.
48
Corporation Law - Stockholders’ Meeting
CORAZON H. RICAFORT v. THE HONORABLE ISAIAS P. DICDICAN

G.R. Nos. 202647-50, March 09, 2016
Section 50 (of the Corporation Code) provides in effect that failure to give notice of the
regular or annual meetings, when the date thereof is fixed in the by-laws, as in Section 1,
Article 1 of the Amended By-Laws of NADECOR, which is "at twelve thirty P.M., on the THIRD
MONDAY OF AUGUST in each year, if not a legal holiday, and if a legal holiday, then on the
first day following which is not a legal holiday," will not affect the validity of the ASM or the
proceedings therein.
49
Corporation Law - Right to Inspect
IENT v. Tullett Prebon

G.R. No. 189158, January 11, 2017, J. Leonardo-De Castro
In a criminal complaint that alleges violation of Section 31 and 34 of the Corporation, Section 144 of the
same code cannot be used as legal basis for the supposed criminal liability. Only Section 74 expressly
states that a violation thereof is likewise considered an offense under Section 144. If Section 144
automatically imposes penal sanctions on violations of provisions for which no criminal penalty was
imposed, then such language in Section 74 defining a violation thereof as an offense would have been
superfluous. There would be no need for legislators to clarify that, aside from civil liability, violators of
Section 74 are exposed to criminal liability as well. Further, the rest of the above-quoted provisions, like
Sections 31 and 34, provide for civil or pecuniary liabilities for the acts covered therein. The lack of
specific language imposing criminal liability in Sections 31 and 34 shows legislative intent to limit the
consequences of their violation to the civil liabilities mentioned.
50
Terelay Investment and Development Corporation vs Cecilia Teresita Yulo

GR. No. 160924, August 05, 2015
The right of the shareholder to inspect the books and records of the petitioner should not be
made subject to the condition of a showing of any particular dispute or of proving any
mismanagement or other occasion rendering an examination proper, but if the right is to be
denied, the burden of proof is upon the corporation to show that the purpose of the
shareholder is improper, by way of defense.
51

GR. No. 160924, August 05, 2015
Among the purposes held to justify a demand for inspection are the following:
(1) To ascertain the financial condition of the company or the propriety of dividends; (2) the
value of the shares of stock for sale or investment; (3) whether there has been
mismanagement; (4) in anticipation of shareholders' meetings to obtain a mailing list of
shareholders to solicit proxies or influence voting; (5) to obtain information in aid of
litigation with the corporation or its officers as to corporate transactions.


GR. No. 160924, August 05, 2015
Among the improper purposes which may justify denial of the right of inspection are:
(1) Obtaining of information as to business secrets or to aid a competitor; (2) to secure
business "prospects" or investment or advertising lists; (3) to find technical defects in
corporate transactions in order to bring "strike suits" for purposes of blackmail or extortion.
53

GR. No. 160924, August 05, 2015
In general, however, officers and directors have no legal authority to close the office doors
against shareholders for whom they are only agents, and withhold from them the right to
inspect the books which furnishes the most effective method of gaining information which
the law has provided, on mere doubt or suspicion as to the motives of the shareholder.
While there is some conflict of authority, when an inspection by a shareholder is contested,
the burden is usually held to be upon the corporation to establish…
54

GR. No. 160924, August 05, 2015
. . . a probability that the applicant is attempting to gain inspection for a purpose not
connected with his interests as a shareholder, or that his purpose is otherwise improper.
The burden is not upon the petitioner to show the propriety of his examination or that the
refusal by the officers or directors was wrongful, except under statutory provisions.
55
Corporation Law - Derivative Suits
NESTOR CHING vs. SUBIC BAY GOLF AND COUNTRY CLUB, INC
G.R. No. 174353 September 10, 2014
Section 1, Rule 8 of the Interim Rules of Procedure Governing Intra Corporate Controversies imposes the
following requirements for derivative suits:
1.He was a stockholder or member at the time the acts or transactions subject of the action occurred
and at the time the action was filed;
2.He exerted all reasonable efforts, and alleges the same with particularity in the complaint, to exhaust
all remedies available under the articles of incorporation, by-laws, laws or rules governing the
corporation or partnership to obtain the relief he desires;
56
G.R. No. 174353 September 10, 2014
3.No appraisal rights are available for the act or acts complained of; and
4.The suit is not a nuisance or harassment suit.
57
G.R. No. 174353 September 10, 2014
The RTC dismissed the Complaint for failure to comply with the second and fourth requisites above.
Upon a careful examination of the Complaint, this Court finds that the same should not have been
dismissed on the ground that it is a nuisance or harassment suit. Although the shareholdings of
petitioners are indeed only two out of the 409 alleged outstanding shares or 0.24%, the Court has held
that it is enough that a member or a minority of stockholders file a derivative suit for and in behalf of a
corporation.
58
G.R. No. 174353 September 10, 2014
With regard, however, to the second requisite, we find that petitioners failed to state with particularity in
the Complaint that they had exerted all reasonable efforts to exhaust all remedies available under the
articles of incorporation, by-laws, and laws or rules governing the corporation to obtain the relief they
desire. The Complaint contained no allegation whatsoever of any effort to avail of intra-corporate
remedies. Indeed, even if petitioners thought it was futile to exhaust intra-corporate remedies, they
should have stated the same in the Complaint and specified the reasons for such opinion. Failure to do
so allows the RTC to dismiss the Complaint, even motu proprio, in accordance with the Interim Rules.
The requirement of this allegation in the Complaint is not a useless formality which may be disregarded
at will. We ruled in Yu v. Yukayguan:
59
G.R. No. 174353 September 10, 2014
The wordings of Section 1, Rule 8 of the Interim Rules of Procedure Governing Intra-Corporate
Controversies are simple and do not leave room for statutory construction. The second paragraph
thereof requires that the stockholder filing a derivative suit should have exerted all reasonable efforts to
exhaust all remedies available under the articles of incorporation, by-laws, laws or rules governing the
corporation or partnership to obtain the relief he desires; and to allege such fact with particularity in the
complaint. The obvious intent behind the rule is to make the derivative suit the final recourse of the
stockholder, after all other remedies to obtain the relief sought had failed.
60
Corporation Law - Derivative Suit
Forest Hills Golf and Country Club, Inc. vs. Fil-Estate Properties, Inc.
G.R. No. 206649 July 20, 2016, J. Del Castillo
The fact that petitioner FHGCCI denominated the Complaint as a derivative suit for
specific performance is sufficient reason for the RTC to dismiss it for lack of
jurisdiction, as the RTC where the Complaint was raffled is not a special
commercial court. Upon the enactment of RA No. 8799, jurisdiction over intra-
corporate disputes, including derivatives suits, is now vested in the RTCs
designated as special commercial courts by this Court pursuant to A.M. No. 00-11-
03-SC promulgated on November 21, 2000.
61
Corporation Law - Derivative Suit
Forest Hills Golf and Country Club, Inc. vs. Fil-Estate Properties, Inc.
G.R. No. 206649 July 20, 2016, J. Del Castillo
In Gonzales v. GJH Land, Inc., 774 SCRA 242 (2015), we laid down the guidelines to be
observed if a commercial case filed before the proper RTC is wrongly raffled to its regular
branch. In that case, we said that if the RTC has no internal branch designated as a Special
Commercial Court, the proper recourse is to refer the case to the nearest RTC with a
designated Special Commercial Court branch within the judicial region. Upon referral, the
RTC to which the case was referred to should re-docket the case as a commercial case. And
if the said RTC has only one branch designated as a Special Commercial Court, it should
assign the case to the sole special branch.
62
Corporation Law - Disposition and Encumbrance of Shares
ANNA TENG v. SECURITIES AND EXCHANGE COMMISSION (SEC)

and TING PING LAY
G.R. No. 184332, February 17, 2016
The delivery or surrender of certificate of stock is not a requisite before the conveyance may
be recorded in its books. To compel delivery to the corporation of the certificates as a
condition for the registration of the transfer would amount to a restriction on the right of a
stockholder to have the stocks transferred to his name, which is not sanctioned by law. The
only limitation imposed by Section 63 is when the corporation holds any unpaid claim
against the shares intended to be transferred.
63
Corporation Law - Non-Stock Corporations
LIM VS MOLDEX LAND, INC.

G.R. No. 206038, January 25, 2017, J. Mendoza
Under Section 52 of the Corporation Code, for stock corporations, the quorum is based on
the number of outstanding voting stocks while for non-stock corporations, only those who
are actual, living members with voting rights shall be counted in determining the existence
of a quorum. To be clear, the basis in determining the presence of quorum in nonstock
corporations is the numerical equivalent of all members who are entitled to vote, unless
some other basis is provided by the By-Laws of the corporation. The qualification "with
voting rights" simply recognizes the power of a non-stock corporation to limit or deny the
right to vote of any of its members.

Similarly, Section 6 of Condocor's By-Laws reads: "The attendance of a simple majority

of the members who are in good standing shall constitute a quorum ... xxx" In relation
thereto, Section 733 of the By-Laws, referring to voting rights, also qualified that only
those members in good standing are entitled to vote.
65

Applying the law and Condocor's By-Laws, if there are 100 members in a non-stock corporation, 60 of
which are members in good standing, then the presence of 50% plus 1 of those members in good
standing will constitute a quorum. Thus, 31 members in good standing will suffice in order to consider a
meeting valid as regards the presence of quorum. The 31 members will naturally have to exercise their
voting rights. It is in this instance when the number of voting rights each member is entitled to becomes
significant. If 29 out of the 31 members are entitled to 1 vote each, another member (known as A) is
entitled to 20 votes and the remaining member (known as B) is entitled to 15 votes, then thetotal
number of voting rights of all 31 members is 64. . .
66

. . .Thus, majority of the 64 total voting rights, which is 33 (50% plus 1), is necessary to pass
a valid act. Assuming that only A and B concurred in approving a specific undertaking, then
their combined votes are more than sufficient to authorize such act. The quorum during the
July 21, 2012 meeting should have been majority of Condocor's members in good standing.
Accordingly, there was no quorum during the July 21, 2012 meeting considering that only 29
of the 108 unit buyers were present.
67

Moldex can send representatives as it is allowed under Section 58 of the Corporation Code.
But whether these representatives can vote themselves as directors is another story
because Section 23 and 92 of the Corporation Code requires that trustees of non-stock
corporations must be members thereof. While Moldex may rightfully designate proxies or
representatives, the latter, however, cannot be elected as directors or trustees of Condocor.
First, the Corporation Code clearly provides that a director or trustee must be a member of
record of the corporation. Further, the power of the proxy is merely to vote. If said proxy is
not a member in his own right, he cannot be elected as a director or proxy.
68
Corporation Law - Close Corporation
Bustos v. Millians Shoe, Inc.

G.R. No. 185024, April 24, 2017, SERENO, C.J.
The subject land is a property owned by Spouses Cruz not by MSI Inc. (MSI) and hence, it
should not be held to answer for the obligations of MSI. Section 97 of the Corporation Code
only species that "the stockholders of the corporation shall be subject to all liabilities of
directors." Nowhere in that provision provides that stockholders of a close corporation are
automatically liable for corporate debts and obligations.
69

Parenthetically, only Section 100, paragraph 5, of the Corporation Code explicitly provides for
personal liability of stockholders of close corporation, viz.:
Sec. 100. Agreements by stockholders. —
xxx xxx xxx
5. To the extent that the stockholders are actively engaged actively engaged in the management or
operation of the business and affairs of a close corporation, the stockholders shall be held to strict
fiduciary duties to each other and among themselves. Said stockholders shall be personally liable for
corporate torts unless the corporation has obtained reasonably adequate liability insurance. (Emphasis
supplied)
70

As can be read in that provision, several requisites must be present for its applicability.
None of these were alleged in the case of Spouses Cruz. Neither did the RTC or the CA
explain the factual circumstances for this Court to discuss the personally liability of
respondents to their creditors because of "corporate torts."
71

We thus apply the general doctrine of separate juridical personality, which provides that a
corporation has a legal personality separate and distinct from that of people comprising it.
By virtue of that doctrine, stockholders of a corporation enjoy the principle of limited
liability: the corporate debt is not the debt of the stockholder. Thus, being an officer or a
stockholder of a corporation does not make one's property the property also of the
corporation.
72
6
Securities Regulation Code
(R.A. No 8799)
73
Virata v. Ng Wee
G.R. Nos. 220926, 221058, 221109, 221135 & 221218, July 5, 2017, Justice Velasco
In this jurisdiction, the Supreme Court employs the Howey test to determine whether or not
the security being offered takes the form of an investment contract. Under the Howey test,
the following must concur for an investment contract to exist: (1) a contract, transaction, or
scheme; (2) an investment of money; (3) investment is made in a common enterprise; (4)
expectation of profits; and (5) profits arising primarily from the efforts of others.
Indubitably, all of the elements are present in the extant case.
74
Virata v. Ng Wee
First, Westmont Investment Corporation (Wincorp) offered what it purported to be "sans
recourse" transactions wherein the investment house would allegedly match investors with
pre-screened corporate borrowers in need of financial assistance. Second, Ng Wee invested
the aggregate amount of P213,290,410.36 in the "sans recourse" transactions through his
trustees, as embodied in the Confirmation Advices. Third, prior to being matched with a
corporate borrower, all the monies infused by the investors are pooled in an account
maintained by Wincorp.
75
Virata v. Ng Wee
This ensures that there are enough funds to meet large drawdowns by single borrowers.
Fourth, the investors were induced to invest by Wincorp with promises of high yield. In Ng
Wee's case, his Confirmation Advices reveal that his funds were supposed to earn 13.5% at
their respective maturity dates. Fifth, the profitability of the enterprise depended largely on
whether or not Wincorp, on best effort basis, would be able to match the investors with their
approved corporate borrowers.
76
Virata v. Ng Wee
Apparent then is that the factual milieu of the case at bar sufficiently satisfies the
Howey test. The "sans recourse" transactions are, in actuality, investment contracts
wherein investors pool their resources to meet the financial needs of a borrowing
company.
77
Securities and Exchange Commission vs CJH Development Corporation

GR No. 210316, November 28, 2016
The sale of "The Manor" or "The Suites" units to the general public under the
"leaseback" or "money-back" scheme is a form of investment contract or sale of
securities. The issue is not a pure question of law. On the contrary, it involves a
question of fact that falls under the primary jurisdiction of the SEC.
78
Securities and Regulation Code - Intra-corporate Dispute
San Jose v. Ozamiz

G.R. No. 190590, July 12, 2017, Justice Carpio
To determine whether or not a case involves an intra-corporate dispute, two tests

are applied - the relationship test and the nature of the controversy test.
79
San Jose v. Ozamiz

Under the relationship test, there is an intra-corporate controversy when the conflict is (1)
between the corporation, partnership, or association and the public; (2) between the
corporation, partnership, or association and the State insofar as its franchise, permit, or
license to operate is concerned; (3) between the corporation, partnership, or association and
its stockholders, partners, members, or officers; and (4) among the stockholders, partners,
or associates themselves.
80
San Jose v. Ozamiz

On the other hand, in accordance with the nature of controversy test, an intra-corporate
controversy arises when the controversy is not only rooted in the existence of an intra-
corporate relationship, but also in the enforcement of the parties' correlative rights and
obligations under the Corporation Code and the internal and intra-corporate regulatory rules
of the corporation.
81
San Jose v. Ozamiz

Based on the foregoing tests, it is clear that this case involves an intra-corporate dispute. It
is a conflict between a stockholder and the corporation, which satisfies the relationship test,
and it involves the enforcement of the right of Ozamiz, as a stockholder, to inspect the
books of Philcomsat Holdings Corporation (PHC) and the obligation of the latter to allow its
stockholder to inspect its books. And because this is an intra-corporate dispute, the matter
was properly elevated to the CA.
82
Aguirre II v. FQB+7, Inc.

G.R. No. 170770, January 9, 2013, J. Del Castillo
The dissolution of the corporation simply prohibits it from continuing its business.
However, despite such dissolution, the parties involved in the litigation are still
corporate actors. The dissolution does not automatically convert the parties into
total strangers or change their intra-corporate relationships. Neither does it change
or terminate existing causes of action, which arose because of the corporate ties
between the parties. Thus, a cause of action involving an intra-corporate
controversy remains and must be filed as an intra-corporate dispute despite the
subsequent dissolution of the corporation.
83
7
Financial Rehabilitation
and Insolvency
84
Philippine Asset Growth Two, Inc. and Planters Development Bank vs.
Fastech Synergy Philippines Inc., et al.
G.R. No. 206528, 28 June 2016
Corporate rehabilitation contemplates a continuance of corporate life and
activities in an effort to restore and reinstate the corporation to its former position
of successful operation and solvency, the purpose being to enable the company to
gain a new lease on life and allow its creditors to be paid their claims out of its
earnings. Thus, the basic issues in rehabilitation proceedings concern the viability
and desirability of continuing the business operations of the distressed
corporation, all with a view of effectively restoring it to a state of solvency or to its
former healthy financial condition through the adoption of a rehabilitation plan.
85
Umale v. ASB Realty Corp.

G.R. No. 181126, 15 June 2011, J. Del Castillo
Being placed under corporate rehabilitation and having a receiver appointed to

carry out the rehabilitation plan do not ipso facto deprive a corporation and its
corporate officers of the power to recover its unlawfully detained property.
86
Viva Shipping Lines, Inc. v. Keppel Philippines Mining, Inc.

G.R. No. 177382, February 17, 2016
a) The debtor has assets that can generate more cash if used in its daily operations
than if sold.
b) Liquidity issues can be addressed by a practicable business plan that will
generate enough cash to sustain daily operations.
c) The debtor has a definite source of financing for the proper and full
implementation of a Rehabilitation Plan that is anchored on realistic assumptions
and goals.
87
Bank of the Philippine Islands v. Sarabia Manor Hotel Corporation

G.R. No. 175844, 29 July 2013, J. Perlas-Bernabe
Among other rules that foster the foregoing policies, Section 23, Rule 4 of the Interim Rules of
Procedure on Corporate Rehabilitation (Interim Rules) states that a rehabilitation plan may be approved
even over the opposition of the creditors holding a majority of the corporation’s total liabilities if there is
a showing that rehabilitation is feasible and the opposition of the creditors is manifestly unreasonable.
Also known as the "cram-down" clause, this provision, which is currently incorporated in the FRIA, is
necessary to curb the majority creditors’ natural tendency to dictate their own terms and conditions to
the rehabilitation, absent due regard to the greater long-term benefit of all stakeholders. Otherwise
stated, it forces the creditors to accept the terms and conditions of the rehabilitation plan, preferring
long-term viability over immediate but incomplete recovery.
Bank of the Philippine Islands v. Sarabia Manor Hotel Corporation

G.R. No. 175844, 29 July 2013, J. Perlas-Bernabe
It is within the parameters of the aforesaid provision that the Court examines the
approval of Sarabia’s rehabilitation.
89
8
Negotiable Instruments
Laws
90
Negotiable Instruments Law
RCBC SAVINGS BANK vs. NOEL M. ODRADA

G.R. No. 219037, SECOND DIVISION, October 19, 2016, CARPIO,J.
While a manager's check is automatically accepted, a holder other than a holder in due
course is still subject to defenses.
The drawee bank of a manager's check may interpose personal defenses of the purchaser
of the manager's check if the holder is not a holder in due course. In short, the purchaser of
a manager's check may validly countermand payment to a holder who is not a holder in due
course. Accordingly, the drawee bank may refuse to pay the manager's check by
interposing a personal defense of the purchaser.
91
9
Transportation Laws
92
Transportation Laws - Diligence Required of Common Carriers
GREENSTAR EXPRESS, INC. and FRUTO L. SAYSON, JR. vs. UNIVERSAL ROBINA
CORPORATION and NISSIN UNIVERSAL ROBINA CORPORATION
G.R. No. 205090, SECOND DIVISION, October 17, 2016, DEL CASTILLO, J.
Applying the pronouncement in the Caravan Travel and Tours case, it must be said that when by (1)
evidence the ownership of the van and (2) Bicomong's employment were proved, the presumption of
negligence on respondents' part attached, as the registered owner of the van and as Bicomong's
employer. The burden of proof then shifted to respondents to show that no liability under Article 2180
arose. This may be done by proof of any of the following:
1. That they had no employment relationship with Bicomong; or
2. That Bicomong acted outside the scope of his assigned tasks; or
3. That they exercised the diligence of a good father of a family in the selection and supervision of
Bicomong.
93
Transportation Laws - Diligence Required of Common Carriers
GREENSTAR EXPRESS, INC. and FRUTO L. SAYSON, JR. vs. UNIVERSAL ROBINA
CORPORATION and NISSIN UNIVERSAL ROBINA CORPORATION
G.R. No. 205090, SECOND DIVISION, October 17, 2016, DEL CASTILLO, J.
The doctrine of last clear chance provides that where both parties are negligent but the
negligent act of one is appreciably later in point of time than that of the other, or where it is
impossible to determine whose fault or negligence brought about the occurrence of the
incident, the one who had the last clear opportunity to avoid the impending harm but failed
to do so, is chargeable with the consequences arising therefrom. Stated differently, the rule
is that the antecedent negligence of a person does not preclude recovery of damages
caused by the supervening negligence of the latter, who had the last fair chance to prevent
the impending harm by the exercise of due diligence.
94
Transportation Laws - Vigilance over Goods
Marina Port Services, Inc. v. American Home Assurance Corporation

G.R. No. 201822, 12 August 2015, J. Del Castillo
MPSI, the arrastre operator, cannot be held liable for the missing bags of flour since the consigned
goods were shipped under "Shipper's Load and Count" arrangement. This means that the shipper was
solely responsible for the loading of the container, while the carrier was oblivious to the contents of the
shipment. Protection against pilferage of the shipment was the consignee's lookout. The arrastre
operator was, like any ordinary depositary, duty-bound to take good care of the goods received from the
vessel and to turn the same over to the party entitled to their possession, subject to such qualifications
as may have validly been imposed in the contract between the parties. However, the arrastre operator
was not required to verify the contents of the container received and to compare them with those
declared by the shipper because, as earlier stated, the cargo was at the shipper's load and count. The
arrastre operator was expected to deliver to the consignee only the container received from the carrier.
95
Transportation Laws - Vigilance over Goods
TORRES-MADRID BROKERAGE, INC. v. FEB MITSUI MARINE INSURANCE CO.,

INC. G.R. No. 194121, July 11, 2016, BRION, J.
A brokerage may be considered a common carrier if it also undertakes to deliver the goods for its
customers. The law does not distinguish between one whose principal business activity is the
carrying of goods and one who undertakes this task only as an ancillary activity.
Theft or the robbery of the goods is not considered a fortuitous event or a force majeure.
Nevertheless, a common carrier may absolve itself of liability for a resulting loss: (1) if it proves
that it exercised extraordinary diligence in transporting and safekeeping the goods; or (2) if it
stipulated with the shipper/owner of the goods to limit its liability for the loss, destruction, or
deterioration of the goods to a degree less than extraordinary diligence.
96
Transportation Laws - Safety of Passengers
G.V. Florida Transport, Inc. v. Heirs of Romeo L. Battung, Jr.,

Represented By Romeo Battung, Sr.
G.R. No. 208802, October 14, 2015
While the law requires the highest degree of diligence from common carriers in the safe
transport of their passengers and creates a presumption of negligence against them, it does
not, however, make the carrier an insurer of the absolute safety of its passengers. Further,
during the ride, the driver and the conductor of the bus observed nothing which would rouse
their suspicion that the men were armed or were to carry out an unlawful activity. With no
such indication, there was no need for them to conduct a more stringent search (i.e., bodily
search) on the aforesaid men. By all accounts, therefore, it cannot be concluded that the
common carrier or any of its employees failed to employ the diligence of a good father of a
family.
97
Transportation Laws - Bill of Lading
MOF Company, Inc. vs. Shin Yang Brokerage Corporation

Once the bill of lading is received by the consignee who does not object to any
terms or stipulations contained therein, it constitutes as an acceptance of the
contract and of all of its terms and conditions, of which the acceptor has actual or
constructive notice. x x x In sum, a consignee, although not a signatory to the
contract of carriage between the shipper and the carrier, becomes a party to the
contract by reason of either:
98
Transportation Laws - Bill of Lading
MOF Company, Inc. vs. Shin Yang Brokerage Corporation

● the relationship of agency between the consignee and the shipper/ consignor;
● the unequivocal acceptance of the bill of lading delivered to the consignee,
with full knowledge of its contents; or
● availment of the stipulation pour autrui, i.e., when the consignee, a third
person, demands before the carrier the fulfillment of the stipulation made by
the consignor/shipper in the consignee’s favor, specifically the delivery of the
goods/cargoes shipped.
99
Transportation Laws - Liability of Ship Owners and Shipping Agents
PHIL-NIPPON KYOEI, CORP. vs. ROSALIA T. GUDELOSAO

G.R. No. 181375, July 13, 2016, JARDELEZA, J.
In Abueg v. San Diego, it was ruled that the limited liability rule found in the Code of
Commerce is inapplicable in a liability created by statute to compensate employees and
laborers, or the heirs and dependents, in cases of injury received by or inflicted upon them
while engaged in the performance of their work or employment.
100
Transportation Laws - Liability of Ship Owners and Shipping Agents
PHIL-NIPPON KYOEI, CORP. vs. ROSALIA T. GUDELOSAO

G.R. No. 181375, July 13, 2016, JARDELEZA, J.
Based on Section 176 of the Insurance Code, casualty insurance may cover liability or loss arising from
accident or mishap. In a liability insurance, the insurer assumes the obligation to pay third party in
whose favor the liability of the insured arises. On the other hand, personal accident insurance refers to
insurance against death or injury by accident or accidental means. In an accidental death policy, the
accident causing the death is the thing insured against. The Court ruled that while the Personal
Accident Policies are casualty insurance, they do not answer for petitioner's liabilities arising from the
sinking of the vessel. It is an indemnity insurance procured by petitioner for the benefit of the seafarers.
As a result, petitioner is not directly liable to pay under the policies because it is merely the policyholder
of the Personal Accident Policies.
101
Transportation Laws - COGSA
TRANSIMEX CO. vs. MAFRE ASIAN INSURANCE CORP.

G.R. No. 190271, September 14, 2016, SERENO, CJ.
According to the New Civil Code, the law of the country to which the goods are to be transported shall
govern the liability of the common carrier for their loss, destruction or deterioration. The Code takes
precedence as the primary law over the rights and obligations of common carriers with the Code of
Commerce and COGSA applying suppletorily.
The strong winds accompanying the southwestern monsoon could not be classified as a "storm." Such
winds are the ordinary vicissitudes of a sea voyage.
102
Transportation Laws - COGSA
TRANSIMEX CO. vs. MAFRE ASIAN INSURANCE CORP.

G.R. No. 190271, September 14, 2016, SERENO, CJ.
Strong winds and waves are not automatically deemed perils of the sea, if these conditions are not
unusual for that particular sea area at that specific time, or if they could have been reasonably
anticipated or foreseen.
Even assuming that the inclement weather encountered by the vessel amounted to a "storm" under
Article 1734(1) of the Civil Code, there are two other reasons why this Court cannot absolve petitioner
from liability for loss or damage to the cargo under the Civil Code. First, there is no proof that the bad
weather encountered by M/V Meryem Ana was the proximate and only cause of damage to the
shipment. Second, petitioner failed to establish that it had exercised the diligence required from
common carriers to prevent loss or damage to the cargo.
103
Transportation Laws - Air Transportation
RAMOS v. CHINA SOUTHERN AIRLINES CO. LTD.

G.R. No. 213418, September 21, 2016, THIRD DIVISION, PEREZ,J.
When an airline issues a ticket to a passenger confirmed on a particular flight, on a certain date, a
contract of carriage arises, and the passenger has every right to expect that he would fly on that flight
and on that date. If that does not happen, then the carrier opens itself to a suit for breach of contract of
carriage. In an action based on a breach of contract of carriage, the aggrieved party does not have to
prove that the common carrier was at fault or was negligent. All he has to prove is the existence of the
contract and the fact of its non-performance by the carrier, through the latter's failure to carry the
passenger to its destination.
104
10
Insurance Law
105
Insurance Law - Incontestability Clause
The Insular Life Assurance Company, Ltd. v. Khu

The date of last reinstatement mentioned in Section 48 of the Insurance Code

pertains to the date that the insurer approved' the application for reinstatement.
However, in light of the ambiguity in the insurance documents to this case, this
Court adopts the interpretation favorable to the insured in determining the date
when the reinstatement was approved.
106

The Letter of Acceptance wherein Felipe affixed his signature was actually drafted
and prepared by Insular Life. The Endorsement is quoted as follows:
“This certifies that as agreed to by the Insured, the reinstatement of this policy has
been approved by the Company on the understanding that the following changes are
made on the policy effective June 22, 1999:”
107

The phrase "effective June 22, 1999" is unclear whether it refers to the subject of
the sentence, i.e., the "reinstatement of this policy" or to the subsequent phrase
"changes are made on the policy. Based on the foregoing, the insurance policy be
considered as reinstated on June 22, 1999. This finding must be upheld not only
because it accords with the evidence, but also because this is favorable to the
insured who was not responsible for causing the ambiguity or obscurity in the
insurance contract. A contract of insurance, being a contract of adhesion, par
excellence, any ambiguity therein should be resolved against the insurer.
108
Manila Bankers Life Insurance Corporation vs. Aban

The "Incontestability Clause" under Section 48 of the Insurance Code provides that
an insurer is given two years – from the effectivity of a life insurance contract and
while the insured is alive – to discover or prove that the policy is void ab initio or is
rescindible by reason of the fraudulent concealment or misrepresentation of the
insured or his agent. After the two-year period lapses, or when the insured dies
within the period, the insurer must make good on the policy, even though the policy
was obtained by fraud, concealment, or misrepresentation.
109
SUN LIFE OF CANADA (PHILIPPINES), INC. v. SIBYA

G.R. No. 211212, June 08, 2016, REYES, J.
After the two-year period from the effectivity of a life insurance contract lapses, or
when the insured dies within said period, the insurer must make good on the
policy, even though the policy was obtained by fraud, concealment, or
misrepresentation.
110
Insurance Law - Claims Settlement and Subrogation
Manulife Philippines, Inc. v. Ybanez

G.R. No. 204736, November 28, 2016, J. Del Castillo
The fraudulent intent on the part of the insured must be established to entitle the
insurer to rescind the contract. Misrepresentation as a defense of the insurer to
avoid liability is an affirmative defense and the duty to establish such defense by
satisfactory and convincing evidence rests upon the insurer. For failure of Manulife
to prove intent to defraud on the part of the insured, it cannot validly sue for
rescission of insurance contracts.
111
Insurance Law - Claims Settlement and Subrogation
Asian Terminals, Inc. v. Malayan Insurance, Co., Inc.

G.R. No. 171406, 4 April 2011, J. Del Castillo
Non-presentation of the insurance contract or policy is not fatal in the instant case.
The subrogation receipt, by itself, is sufficient to establish not only the relationship
of herein private respondent as insurer and Caltex, as the assured shipper of the
lost cargo of industrial fuel oil, but also the amount paid to settle the insurance
claim. The right of subrogation accrues simply upon payment by the insurance
company of the insurance claim.
112
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CORAZON H. RICAFORT v. THE HONORABLE ISAIAS P. DICDICAN

IENT v. Tullett Prebon

Terelay Investment and Development Corporation vs Cecilia Teresita Yulo

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Terelay Investment and Development Corporation vs Cecilia Teresita Yulo

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Terelay Investment and Development Corporation vs Cecilia Teresita Yulo

Terelay Investment and Development Corporation vs Cecilia Teresita Yulo

Terelay Investment and Development Corporation vs Cecilia Teresita Yulo

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ANNA TENG v. SECURITIES AND EXCHANGE COMMISSION (SEC)

LIM VS MOLDEX LAND, INC.

LIM VS MOLDEX LAND, INC.

Similarly, Section 6 of Condocor's By-Laws reads: "The attendance of a simple majority

LIM VS MOLDEX LAND, INC.

LIM VS MOLDEX LAND, INC.

LIM VS MOLDEX LAND, INC.

Bustos v. Millians Shoe, Inc.

Bustos v. Millians Shoe, Inc.

Bustos v. Millians Shoe, Inc.

Bustos v. Millians Shoe, Inc.

Securities and Exchange Commission vs CJH Development Corporation

San Jose v. Ozamiz

To determine whether or not a case involves an intra-corporate dispute, two tests

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